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John Hamm, CEO of Accept360

In two previous articles, "The Coming Crisis of IT Management" and "Eight Steps For Addressing the IT Management Crisis" I discussed IT’s need for a new paradigm for managing itself. This paradigm will require a more collaborative approach. IT’s monopoly over technology resources is over. The question is: How can IT do its job of enforcing standards, ensuring quality and supporting the business, in a world in which control has become distributed?

This article is an thought experiment in some ways. It assumes that the above problem has been solved. The questions then become: “How can IT exercise leadership and better serve the business?” and “How can IT find ways of systematically enhancing IT products and services to help the business achieve its goals?”

I am proposing that companies with IT portfolios that are well managed will inevitably need an innovation process as the CIO and CTO (which I call CITOs) start to exhibit leadership. In any IT portfolio, there will be a significant amount of ideas of all shapes and sizes for improving that portfolio. The better the IT management, the faster these ideas will come. Innovation will be found everywhere from installing a new ERP system to creating a new dashboard. The question is, “How can CITOs accelerate the process of devising new ideas, yet manage and prioritize the innovation process, so that the business is served and ideas are put into action in a logical manner?”

The Reality of User-Driven Innovation

In my research, I have discovered that user-driven innovation is a powerful way to spur broader innovation in an organization. In the classic Eric von Hippel model of user-driven innovation, the person who has the domain knowledge should be given the ability to construct their own solution. If you place the tools of production for a solution in the hands of someone with domain knowledge, that person is able to construct a better solution than would be created if they had to ask somebody else to construct it for them, by explaining their requirements. Von Hippel calls the break point between user-driven innovation and traditional requirements gathering a form of “sticky knowledge.”

In the modern IT environment, which is bursting with capabilities, it’s not realistic to think that we will be able to train the entire business on the potential of all of the IT capabilities available to serve its needs, and make those capabilities easy enough for everyone to construct her own solution. In other words, user-driven innovation in the widest sense doesn’t work for IT.

Of course, it should be the goal of every CIO to achieve user-driven innovation when possible. This is one of the reasons that companies such as QlikView and TIBCO Spotfire and others have done very well—they’ve been able to offer tools to users, who then can create what they need for themselves. That sort of empowerment is, and definitely should be a goal. Given the current state of IT, however, it’s not realistic to wait around for innovation to happen, all IT problems can be reduced to an empowerment set of capabilities.

Creating an Innovation Function Inside IT

So, how can IT innovate? Our strong opinion is that CITOs need to take up the mantle of user-driven innovation, using a different paradigm. Instead of placing the burden of on the shoulders of business heads, the CITO must create an innovation function in his organization, in which practitioners are systematically learning about the problems the business is having, and the information needed to support the business. They should be constantly trying to tease out the questions that, if they could be answered, would help the processes run better. They should be asking, “What information, if it were available, could alter the way we do business; what capabilities does the business imagine they’d like to have?”

In so doing, the CITO will become more intimate with business processes, and the capabilities that are possessed by IT, but which are opaque to the businessperson, could be applied, both to the questions and to the information that is drawn out by asking the questions. Further, those IT capabilities can be applied to new questions, and new information that would be routinely transferred from the CITO to the business, which could then start a process of innovation. The innovation process will basically look like the CITO researching what’s important for the business, digging up the information needed, and in that process becoming more intimate with the business.

I’ve written about this subject at length before in books such as "Process First", our book with Marco ten Vaanholt on business process experts, who play a similar role to the one that I’m advocating here. But this innovation function would be a new institutional capability. If this function succeeds, what are the results?